Registrar bows to pressure on company fines

The system for registering ultimate beneficial owners (UBO) at the Registrar of Companies, will allow companies to post this information without paying the fines imposed on January 1 for failing to do so, it was announced on Friday.

The Registrar and the ministry of commerce had come under intense pressure from professional organisations, including the Bar Association, the Chamber of Commerce (Keve), the accountants association (Selk) and the Cyprus International Business Association, as well as from deputies of all parties, to review its policy that had resulted on hefty fines being imposed on businesses.

On Friday morning, speaking on Trito radio, the general secretary of Keve, Marios Tsiakkis called on the commerce ministry to review the “debilitating and irrational” fines being imposed on businesses for their alleged failure to register their UBOs by January 1, of this year.

A fine of €200 was imposed on every beneficial owner, who failed to post this information on a platform set up by the Registrar of Companies, by 1 January 2024, and €100 for every day after that. A company with one UBO, that had not registered on the platform by Friday, for example would owe the state €1,300.

Until Friday, the system did not allow a company to post this information if it had not first paid what it owed in fines. For a company with five UBOs, the fines would be €5,500 by Friday. The law relating to UBOs affects 200,000 Cyprus-registered companies.

Tsiakkis had warned, before Friday’s decision, that, “Companies will not be able to pay the fines that will be accumulated, causing other problems.”

All this has changed with the decision announced on Friday and companies would be allowed to post their UBOs without paying the fines they owed. It was unclear whether the fines would still have to be paid at a later stage. Presumably, this will be decided by the Registrar and the commerce ministry after consultations with the professional groups.

The problem was created by the Registrar, who had changed the platform last year. A platform had originally been set up for the registering of a company’s UBOs in 2022, in accordance with an EU directive. In 2023, a new platform was developed by the Registrar, but it could not technically transfer the data from the old platform, which meant everyone had to register again.

Companies that were registered were given until the end of February to register on the new platform, after securing access codes from the Citizens’ Service Centre (Kep). Meanwhile Kep, according to reports, was unable to offer appointments before March.

The real problem however, was that the circular explaining this was confusing, not making it clear what companies that had not registered on the old platform had to do. This was why the professional groups have been complaining.

Tsiakkis emphasised the need for clarity in the reporting process, describing the circular as “incomprehensible” and noting difficulties in understanding it, even among professionals. The circular  did not make it clear whether the law applied to public companies and trusts. Until Friday’s change of heart, the commerce ministry had insisted that adequate time was given for compliance.

The issue has been tabled for discussion by a group deputies from all parties, at Tuesday’s House commerce committee. Deputies have said they would seek to suspend the imposition of fines which was a big burden on companies.

Edek deputy, Elias Myrianthous said that deputies expected an amendment of the legislation or the issuing of a decree that would remedy the situation. “If this does not happen the legislature will go ahead with its own bill proposal,” he was quoted as saying.

Chairman of the commerce committee, Disy deputy Kyriakos Hadjiyiannis, said that thousands of companies had been unable to register their UBOs because of the confusion caused by the Registrar;s circular. These fines should not remain, while those that have already been paid should be returned, Hadjiyiannis told Phileleftheros.